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CBN asks troubled banks to repay N620bn loan May

By Omoh Gabriel, Business Editor
THE Central Bank Governor, Mr. Lamido Sanusi, has said that the apex bank expects the N620 billion it injected into the eight troubled banks to be repaid by May.

According to Sanusi, who spoke in Pretoria, South Africa, Monday: “We expect that by April, May, the exposure with the banks should have been paid back by the banks.”

The CBN boss said the repayment was envisaged on the passage of the Asset Management Company, AMC, bill by the legislature, by March.

The company, when operational, is expected to buy-off non-performing assets from the troubled banks. The apex bank, in a rescue mission to the banking industry, injected N620bn to shore-up the fortunes of eight ailing banks and save them from imminent collapse.

According to a report, Sanusi said the inability of the banks to repay the money was due to the liquidity tied up in non-performing assets, explaining that AMC would help them overcome this challenge.

Hopeful on AMC bill

“When AMC bill is approved and it is set up, part of what it will do is to buy up the non-performing loans of the banks and evaluation will be based on the collateral and what we think is the reasonable value for the underlying collateral.

“When AMC buys the non-performing loans, those banks will be in a position to pay back the money that we put in because the reason they cannot pay back now is their liquidity which is tied up in-non performing assets,” he added.

Sanusi said talks on possible mergers of the ailing banks with local and foreign banks were going on, adding that shareholders and directors of the banks were working with advisers on the offers made.

“If there is continued interest, we will get transactions done shortly,” he added, reassuring that ”the days of expressing apprehension in the banking system had been put behind with the reforms. The confidence has actually come back. All people are waiting for is the continuation of movement forward as we pursue the AMC bill,” he said.

Sanusi said the absence of President Umar Yar’Adua did not create any vacuum in the banking reform as the Acting President, Dr. Goodluck Jonathan, had provided endorsement for the apex bank’s actions.

“I have never felt anything like a vacuum and I have always said that. In the President’s absence, the Vice-President was always acting and he is now formally the Acting President,” Sanusi said. The CBN boss said sacking of the banks’ chief executives showed that they were not above the laws and must comply with guidelines.

Problem with Nigeria

“We had a problem of people not complying with the laws and this is usually the story with Nigeria. Banking is ultimately a matter of trust and all leadership positions are positions of trust. If you have a bank CEO who refuses to comply with the guidelines, it then trickles down.

“So, you had banks that were not well run because the leadership had issues. It was a governance problem and that is what we have got to address. We have got to get to a situation where the people who are responsible for running banks understand that they should run and govern themselves and they do not require being forced to do so,” he stressed.


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